Tulip Protocol app review

Tulip Protocol

Tulip Protocol app review

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Basic info

  • Token TULIP
  • Audited yes
  • DAO yes
  • Yield farming yes
  • Team private
  • Hacks no

Audits

Auditors:

Sec3

Sec3

Audits:

Sec3, June 2022

Token profile

Price Market cap.

Camille A. Hanard

Last updated: Nov 23, 2022

Tulip Protocol 

Tulip Protocol, previously known as SolFarm, is a Solana-based yield aggregation platform intended to maximize return through various yield aggregation mechanisms.  Tulip Protocol currently offers four types of products - Auto Vaults, Strategy Vaults, Lending and Leveraged Yield Farming.

How does Tulip Protocol work

Strategy vaults are vaults that deploy multiple strategies on single asset deposits, more specifically they optimize lending rates across Solend, Tulip, and Mango, ensuring the pool is accessing the best-aggregated lending rate across the entire ecosystem. In order to avoid rewards gaming, the protocol has deployed a locking mechanism within 15 minutes which prevents immediate withdrawal. 

Tulip supports auto-compounding vaults from Orca, Raydium, Atrix, and Saber, which are called Auto-vaults. Once the assets are deposited into the selected auto-vault, the auto-compounding strategy will do the process of harvesting and reinvesting the rewards every 10 minutes. Currently, there are over 40 active vaults.  Users receive a token for all Tulip V2 Auto-Vault deposits, allowing them further composability throughout Solana DeFi.

The protocol currently charges fees on any yield generated and the APY is before fees are deducted. Also, APY depends on Total Value Locked (TVL), Token Price (Such as $RAY or $ORCA), and block times, meaning that the final rewards might vary.

Tulip Protocol also offers Single-asset lending. Whenever a user deposits their assets into Tulip Protocol's lending pool, the protocol mints back the collateral token in the form of a tuToken  (ie. tuUSDC, tuUSDT, tuSOL, etc). This token reflects the share of the lending pool and is needed to redeem users’ funds. tuToken has no other utility other than redemption from Tulip Protocol's lending pool.

Since lending pools generate interest per block (every 5 sec), the generated interest is accrued into the lending pool and there is no need to harvest rewards. The tuToken token balance remains static while the value of the pool grows over time; this means that tuTokens will be worth more when redeemed.

Tulip Protocol fees are 10% on any interest, and the displayed APY value is before fees. The interest rate depends on the utilization, the more users are borrowing, the higher yield goes to the lenders. Rewards are given in the same token (USDC for USDC, SOL for SOL, and so forth). 

The assets deposited to lending pools are also used in leveraged yield farming. 

In Leveraged Yield farming (LYF), users deposit a token as collateral, borrow tokens up to 3x leverage, and then farm all the deposited and borrowed tokens on a DEX (Raydium or Orca) to earn trading fee rewards and farming rewards, which are auto-compounded all in one click. 3x leverage means that a user can deposit collateral and borrow up to 3x of what they have deposited and pay interest on the borrowed amount. 

If Loan to Value (LTV) exceeds 85%, the protocol disables additional borrowing,  triggers liquidation, and collects a 5% bounty, which will be added to the insurance fund. 

How to use Tulip Protocol 

Before starting to use the Tulip app, a wallet has to be connected first. The list of wallets Tulip Protocol supports includes Phantom, Sollet Web, Ledger, Solflare Extension, Solong, Slope, MathWallet, and many others. 

For lending, it is necessary to navigate to the Lending tab from the main page, which will show the list of single asset lending pools with their APY. After selecting the lending pool, users need to click on it, then select the number of assets to be deposited, click ‘deposit’ and confirm the transaction. 

To stake tokens into the auto-vaults, users need to navigate to the corresponding tab on the main page, then choose the pool from the list, and click on it. The window will then show the TVL, daily APR, Weekly APY, and Yearly APY of the pool. Then it is necessary to select the number of tokens to be deposited and click ‘Deposit’ and confirm the operation. The Withdraw button will appear in the same window, on the right box. 

For leverage farming, users need to navigate to the corresponding tab on the main page, then review the pools where the position will be opened. Then it is necessary to click on ‘Farm 3x’. The leverage can be adjusted in the pop-up window. The same pop-up will also show trading fees, rewards, borrowing interest, total APR, and total APY, users need to select the number of assets to be supplied, and confirm the transaction by clicking the ‘Farm’ button. Once it is confirmed, the user's position can be found and managed in the positions tab.

The Tulip Protocol’s Token TULIP 

TULIP is the Tulip Protocol’s utility token with a total supply of 10,000,000 and a distribution as follows: 48% - liquidity mining and ecosystem, 20% - team, 12% - treasury, 12% - strategic partners, 5% - liquidity provisioning, 2% - advisors, and 1% - retroactive rewards.

The TULIP token can currently be staked for sTULIP.  sTULIP can be used for on-chain governance in the Tulip DAO via Realms.

Is Tulip Protocol safe

Tulip protocol has been audited by Sec3. The protocol’s team warns that its code is novel and experimental. It is also claimed that it has been peer-reviewed by the Solana Foundation and other developers, however, please note that the Tulip Protocol team officially states the platform is not liable for funds lost due to smart contract exploits.

Tulip has been recently listed on InsurAce.io, a decentralized multi-chain insurance protocol, allowing users to protect their digital assets from smart contract vulnerabilities.

The team behind Tulip Protocol is anonymous. 

Partners 

The Protocol has raised $5M worth of investments from Jump Capital, Alameda Research, Amber Group, Cadenza Ventures, Fisher8 Capital, CMS Holdings, Rarestone Capital, FinTech Collective, and DV Chain. 

Tulip Protocol has many public partnerships with Solana DeFi protocols such as Solend, Solana Foundation, Raydium, Serum, Orca, and Saber. 

Tulip Protocol has recently partnered with InsurAce.io to focus on protecting digital assets against potential hacks or losses.

What’s next

The protocol is planning to deploy more pools into the vaults, and integrate more protocols into the ecosystem.

Links

https://tulip-protocol.gitbook.io/tulip-protocol/

 

 

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